Hindustan Aeronautics Limited (HAL) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Hindustan Aeronautics

Limited Q4FY26 earnings conference call hosted by Ambit Capital.

As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. I now hand the contents over to Mr. Sameer Thakur from Ambit Capital. Thank you, and over to you, sir.

Good afternoon, everyone. On behalf of Ambit Capital, I thank the management of Hindustan Aeronautics Limited for the opportunity to host their Q4 FY26 earnings conference call. To discuss the results, I am pleased to welcome Shri Ravikota, Chairman and Managing Director, Shri Baranya Sinapati, Director of Finance and CFO, Shri Shailesh Bansal, Company Secretary. Now, I invite Sri Ravi Kota to take us through the key highlights of the quarter, post which we will open up for Q&A. Thank you, and over to you, sir.

Thank you very much. Good afternoon, ladies and gentlemen. At the outset, I would like to thank all of you for taking the time to join us today and for your continued confidence in HAL. This interaction is particularly significant for me personally as I assumed charge as Chairman and Managing Director of HAL on 1st May 2026. It's a huge responsibility to lead one of the India's most strategic aerospace and defense organization at a time when Indian aerospace and defense ecosystem is undergoing transformational growth. Today, I have with me Dr. Baryanya Senapathy, Director of Finance and CFO, and Shri Shailesh Bansal, Company Secretary, to answer any question that you may have. We have declared our results for FY2025-26 yesterday and hosted the results in our website as well as filed with the stock exchanges. Hope you had opportunity to see the same. I would like to highlight some of the physical milestones that we achieved during 2025 and 2026 before discussing the financial numbers. Some of the major achievements during the year are production capacity of 8 LCA mark 1a per annum established with inauguration of the third production line at HAL Nasik in presence of Honorable Rakshamantri on 17th October 2025. Indigenously designed and developed ALH Drew NG took maiden flight in presence of Honorable Minister of Civil Aviation on 30th December 2025. Maiden sortie of first series production Hindustan Turbo Trainer HTT-40 aircraft successfully completed on 24th October 2025. HL received the Certification of Indigenous Manufacturing of Shakti Civil Engine from the DGCA on 30 December 2025. As part of the diversification, HL signed the SSLV Technology Transfer Agreement with ISRO, INSPACE and ENSIL on 10 September 2025, securing a non-exclusive license to manufacture the SSLV. For production of commuter aircraft, SJ-100 in India, HL and public joint stock company, United Aircraft Corporation, Russia, signed an MOU on 27 October 2025. HL contributed to ISRO's successful launch of LBM-3 machine on 2nd November 2025 and LBM-3 M6 machine that deployed the massive Bluebird Block II satellite on 24th December 2025 by on-time supply of space-worthy hardware. To position HL as key player in Global Aerospace supply chain. HAL has signed an agreement with Saffron Aircraft Engines in June 2025 for the industrialization and production of rotating parts of LEAP engines, which powers the single-isle civil aircraft such as Airbus A320neo, Boeing 737 MAX, etc. Indigenization success stories, advanced manufacturing capabilities, and opportunities for MSME partnership showcased during the National Defense Industry Conclave, 19-20 March 2026, inaugurated by Honorable Raksha Mantri. Now, I would like to discuss few financial highlights for FY2025-26. We have achieved revenue from operations of 33,050 crores for financial year 2025-26 in comparison to 30,981 crores in financial year 2024-25. This is an increase of 7% despite global aerospace supply chain disruptions. Deliveries of ALH helicopters, AL-35 FP engines, RD-33 engines, and ROH revenues help offset delays in Tejas Mark 1A and HTT-40 programs. Our diversified portfolio has enabled balanced growth across segments. Our manufacturing revenue was Rs. 9,227 crores, and ROH revenue was at Rs. 20,525 crores. The manufacturing revenue increased from Rs. 7,057 crores to 9,227 crores with the help of delivery of ALH helicopters, AL-3153 engines, and RD-33 engines. The manufacturing revenues are expected to grow further on commencement of delivery of LCA Mark 1A and HCT48 during the current year. During the year, we also achieved export revenue of Rs.501 crores as against Rs.400 crores of the previous year. The profitability remained robust during the year. Our EBITDA grew by 11% to reach Rs.13,472 crores as against Rs.12,168 crores of previous year. Operating EBITDA was at 30% of the revenue and was maintained at that level of previous year. We reported a profit before tax of Rs. 12,112 crores as against 10,820 crores reported in the previous year. This is an increase of 12%. Coming to capex and R&D expenditure, we are continuously investing in our future through investment in building capabilities in the form of capex and in our future capabilities through R&D expenditure. During the year, we have crossed rupees. 2,386 crore as capex and rupees 2,794 crores in R&D activities, which is around 8-4% of our revenue. Considering the major orders in hand, envisaging new orders and to ensure timely delivery to the customers, production capacity ramped up of the following major projects namely LCA and H340 manufacturing at Bangalore and Nasik Plants. LCA's manufacturing as Bengaluru and Tumkuru plants will be the focus areas going forward. Additionally, we plan to develop manufacturing infrastructure for LCA Mark II, GE414 engines, and IMRS engines, infrastructure facilities for manufacturing SSLV, indigenization of aero engine projects, etc., along with facilities to support design and development. activities for IMRS and other projects. We plan to invest around 12,000 crore in these projects by 2030. During the year, HAL has filed 223 IPR applications, which make cumulative number of 2,842 IPRs filed by company. Further, 84 IPRs have been granted during the year, taking cumulative IPRs held by organization to 1,226. Coming to order book, the order book of the company further improved to Rs. 254,538 crores against the previous year order book position of 1,89,302 crores as on 1st April 2025 and after liquidation of current year turnover of Rs. 31,792 crores. During the year, the fresh order received by the company were Rs. 97,028 crores, which includes the manufacturing orders of 69,668 crores, and ROH orders of Rs. 26,539 crores. Major orders bagged include contracts for supply of 97 LCA Mk1A to IAF, quantity 6 ALH Mk3 MR to ICG, Quantity 8 DO228 to ICG. Quantity 10 ALS through NG to Pavanhans. Quantity 2 Hindustan 228 to Guyana. The order for pipeline looks even more promising with additional anticipated contracts of 143 ALS for Army, IAF, 230 upgrade, upgrade of 40 DO228, etc. are at various stages of approval. In total, we expect to receive orders of Rs 90,000 growth, including the ROH orders during the next two years. I would like to conclude and say that these results represent not just numbers on the balance sheet, but the culmination of dedicated efforts by our 24,000 plus employees. The trust of our armed forces and collective aspirations of a nation-building self-reliance in aerospace and defence. While this past year has presented significant challenges, it has also demonstrated HL's resilience and our unwavering commitment to national security. Thank you and Jai Hind.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use answers while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Atul Tiwari from J.P. Morgan. Please go ahead.

Yes, sir. Thanks a lot. Sir, what is the status of a start of a delivery of LCA Mark I A to Air Force when we can expect Air Force to accept the first lot? That is the first question. And what is the revenue growth and EBITDA margin guidance for FY27?

Thank you, Mr. Atul. This is CMB here. As you are aware that we have six engines received from GE now, and all these aircrafts are flying. There are few testings still undergoing now, and we are going to discuss the same with Air Force in the coming months. So we are hoping to resolve everything and stabilize by August or September. And I'll just hand over to Director of Finance to give guidance.

As far as revenue growth is there, we are hopeful that we'll be making a double-digit growth in the current financial year, 26-27. And every time margin always, we have maintained around 30-31 percent, and it will be maintained.

Okay, sir, I think because these timelines of LCA delivery have gotten stressed, you know, multiple times, and is there a risk that the delivery schedule spills well beyond August and possibly only in the very fag end of FY27?

No, this time, because DA has committed more engines this year, So, with that, we are hopeful now that by August, September, we should be able to start the delivery.

But since the delay in the delivery of the first six aircraft appears to be beyond engine, because those aircrafts are ready, and based on media reports, and we don't know the reality, it looks like that there is some software issue, etc. So could you throw some light, what is holding it up, and how big the issue is, and what are you doing to resolve those issues? I'm asking it because in the market, it is causing fear of anxiety in the investor base, and there are question marks whether any aircraft can be delivered even in FY27.

See, the testing, whatever has been done, is only for refining whatever has been already tested. So this is a continuous process. So since there are more technicalities involved in that, I will restrict to tell that we are moving in a very positive direction, and we are hopeful that by August, September, we should be able to start the delivery. Okay. Thank you. Thank you.

Thank you. The next question is from the line of Amit Dekshis from Goldman Sachs. Please go ahead.

Yes, Amit.

Mr. Amit, please go ahead with a question. As there is no response from the line, we'll move to the next speaker question, which is from the line of Omishra from Nomura. Please go ahead.

Yeah, hi, sir. Good evening, and Congress for Strong Operational Performance in Folkwater. So my first question is again on LCA program. If you can articulate us in a better way what went wrong in terms of execution delays apart from engine supplies from GE, and what is exactly left in terms of testing where we can get confident of deliveries by probably second quarter in this financial year?

Thank you very much. Again, as I told Mr. Atul, the refinements, whatever, because I cannot get into the details of it. So, these refinements, we need to meet certain parameters. So, these refinements, because these are all design and development projects, it has to go through iterations. So, we are going through iterations of that and... We are confident because now it is going in the right direction, the results are very promising, but still some reformants are required, so which VHL is working on that, we are confident that we will be able to meet the September deadline.

Got it. If I understand correctly, we are doing a lot of these platforms after design and development for the first time in terms of execution, and in designation as per se, for us in terms of scope has also increased. So, what are our action plans in terms of mitigating these execution risks in terms of other programs, whether those are in terms of, say, HTT-40 or LCH on the helicopter side? So, what are our plans in terms of mitigating these execution risks? And at the same time, if you can guide us in terms of execution timelines for other larger programs like LCH and Sukhoi-12 Mark-1 aircrafts.

So you please, one thing is, see the other programs, first of all, whatever risk mitigation what you are telling, see what we are trying to do is we are trying to identify more than one vendor for the supply of items, whether it is indigenous or from a foreign source, so that we have an alternate... As far as the HVT40 is concerned, all the purchase orders required is already placed on the vendors. So now we are in the receipt of these items, even though it is slow because of the geopolitical situation. We will still be able to maintain the deliveries of the other platform what you mentioned. In time, because all the structures, everything we are going at as per plan.

To supplement CMD, there is little bit difference between LCH and LCH. LCH is our own design product. STT-40 is our own design product. And LCH, it's a joint production between NADA and PA. So we are confident this helicopter LCH and STT-40, it is on the right track. And as per the contract, it will be delivered. LCH, hopefully, as per contract 27-28, and we'll be able to deliver in time.

Got it, sir. So my second question is pertaining to supply chain risk that we have in the business, where if I look at beyond probably engine supply from GE, in case of other programs, are you seeing any kind of supply disruption, whether it is for radars or engines, for that matter in programs like Sukhui, LCH helicopters, HTT-40, aircrafts, any kind of supply chain risk over there where vendors are delaying any major components to you?

If you see now, the current global situation, whatever is there, I will not say disruption, but slowness is there. There is slowness. But when we have discussion with them, and now we have started discussing with their tire-1, tire-2 vendors also, we are getting confidence that we should be able to get the items. Maybe minor delays will be there, but we are confident that it will reach within the time required for me to complete the platform and delivery. Because the current situation is like that, some delay is expected from few places.

Got it, sir. Sir, my last question is on the guidance side. If I look at your guidance for revenue growth of double digit, if you can quantify relatively in a better way where exactly this growth is expected to come by, how much increase over and above 92, 93 billion that we reported on manufacturing side we can expect in 27?

When I said double digit, see, current year, if you see, it is around 7% growth. So, double digit means you cannot expect a significant like 15 to 20 percent. Yes, it will be in the range of 10 to 12 percent minimum.

Got it, but particularly in case of manufacturing, where we have seen about 30% here, only a growth, yeah.

Manufacturing 30%, if you see, if hopefully our LCA program and STD 40, if we are able to deliver, then manufacturing, if you see that in the composition, manufacturing, sale, will play a dominant role.

Got it, sir. Thank you so much for these answers. I'll get back into the queue. Thank you.

Thank you. The next question is from the line of Sef Sourabh Gujar from ICSA Prudential Asset Management. Please go ahead.

Thank you for the opportunity, sir. If you can highlight on the upcoming programs like Pages Mark 2 when you extend the ground testing and prototype rollout of, say, Mark 2 program, and also on the other future programs like the UCAVs, any update on that? Expected on the next one.

Sorry, what is the second program you talked about?

Unmanned aircrafts and all those other programs beyond that, right? May be first on the Thesis Mark II when you expect the prototype rollout.

Yeah, the assembly of these structures are going on for Thesis Mark II. So, we are expecting in the last quarter of this year, For the rollout of Mark II. Again, these are all joint design between us and ADA. So there are a few things which has to be resolved by them also. So we are expecting that by March we should be able to rollout Mark II. But other than that, as you said, unmanned vehicles, we are doing a rotary UAV. Which is, the proto is already built and we are doing the ground test now. And the CAT Warrior, which we did the ground run last year, it was successful. Now we are actually building the actual UAV now. That we are expecting next year, not this year, next year maybe it will have the flight.

So the second question is on the Mark 1a platform. In our guidance, how many Mark 1a have we considered?

Actually, what is happening now, this time, we have received 6 engines, so GE is committing another 20 engines, 15 to 20 he is telling, but not the exact number what he is telling. So we are expecting around 20.

So, sir, and all of this.

Thank you. The next question is from the line of Mohit Pandey from Citigroup. Please go ahead.

Yeah, good afternoon, sir. Sir, first question is on the ROH revenue. The growth seems to have come off compared to what we used to carry earlier. So, any color there, sir? That would be question number one.

Hello, if you speak... The prayers, actually, there is a little bit of... Pair sales has come down by around 500 to 600 crores in the current financial year as compared to the last financial year. But the repair and overall, it is almost at the same level because we have not added any new platform to our repair and overall. I mean, activities. It's all the same platform, like ALH and PA. Maybe when LCA, when the LCA will come up for repair and overhaul, maybe next year and more of ALH, if it comes, then only it will be a significant increase in repair and overhaul. We may have in the next financial year. Otherwise, if you see platforms are the same and then at the same level only, except the escalation part and other things might not be there.

Understood, sir. Secondly, on margins, so your guidance of 30-31% margins, sir, with manufacturing share increasing and with… Some supply chain disruptions that you highlighted, input cost going up. So, how do you plan to deliver similar margins, sir, 30-31%? Are there cost pass-through process with regard to commodities in your contract with end-users?

I didn't get you. Maybe...

No, but these, that disruption, whatever, or the delay... What I told you in the beginning,

these purchasers are already placed. For 26-27, already we have the inventory. The inventories are there and only some components it may come with the purchasers already been placed one year back or two years back. So there will not be any cost increase as such for 26-27 cost of production. I don't think there will not be any increase. And as the purchase orders have been paid for 83 LCA, long back our inventories were purchased and we have built up the inventory. So we'll get that advantage. And then we had negotiations and all those things.

And if you see, we have already produced the aircraft, like you have seen, around almost more than 30 plus aircraft is already produced, for example, LCA is produced, means all the items are fitted and it is in ground run also happened.

And as far as ERV exchange rate, this is already mitigated, it is factored in the contract, so we are not affected. So our cost of production will not increase.

Understood, sir. Sir, and from, say, next year perspective, when the older inventory gets used up, so just to understand, are there similar to the exchange variation clauses, also commodity-linked, the cost path?

The ERV clause is there in each and every contract, and even in the repair and overrun contracts also. Yeah, that is clear, sir.

But, yeah, on the commodity and other input cost also, are there passports available?

Other input cost means only material, labor and all those things with escalation is already factored. And material escalation is already factored in the contract itself. So if, I don't think, and then based on our... The negotiation and the clubbing of the material and the Nilti BA and all those things, we don't see any significant increase in the material cost also in our future program because 97 LCA already we have placed purchase orders.

Yeah, understood, very clear on that, sir. One more question. So, now that next two years, we'll be working on five, six programs parallelly with LCH Prachand also coming up for delivery and Su-30. So, how are we, while we have mentioned about Capex and all, with regards to manpower and other resources, how are we placed, what could be the peak aircraft and helicopter delivery that we could do, say, in 28 or 29, any color on that? Because we understand there is increasing private sector competition also for manpower and all.

All the deliveries for the next year will be as per the contract. You touched upon the manpower and other things. You see, now we are trying to increase our efficiency inside. And we are trying to outsource because we have partnered with so many people outside to do the main full structures. So that I will be the core integrator. And we are trying to insource as much as possible so that my manpower cost remains as low as possible so that I can use insourcing and outsourcing so that I get a better efficiency and the better costing for the product.

And still, we are open. This will be a balancing thing. 28, 29, we are talking about two to three years down the line, but we have not closed our recruitment process also. It will be a balancing one. More of outsourcing, insourcing, and some recruitment will also be there in the due course.

Understood, sir. And for all your manufacturing, just one clarification, all the manufacturing projects. Revenue recognition is only at the time of delivery, right? It is not on percent of completion method.

No, it's a delivery.

It's a delivery. So we will have possibly a lumpy year two years down the line. Okay, sir. And, yeah, yeah. So, and sir, just one follow-up to the previous participant. We have read about press reports about the GE F414 engine. Right, so the MK2 prototype you mentioned by next year and the order by when it could come, sir, any sense on that?

That will be by end of maybe next year because it has to fly, then parallelly airports will start pushing the paper. So we are expecting by end of maybe another... Another two years. Two years down the lane, we can expect the order.

Understood. Thank you so much, and I'll come back in the queue.

Thank you.

Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, please limit your question to two per participant. If you have a follow-up question, you may rejoin the queue. The next question is from the line of Kavish Pare from 361 Capital. Please go ahead.

Hi, sir. Thanks for the opportunity. On the Sukhoi program, I have two questions. First, on the 12 Sukhoi 30 aircraft order, what is the expected execution timeline and when are delivery is likely to commence and how many aircraft should we expect to be delivered annually over the next three years?

Okay. The product as per contract, it starts from 27-28. That is, in that year, there is only one aircraft as per. As per contract, and next year we are going to complete it, all 11 will complete it, 28-29.

So 11 units in FY29?

Yeah, yeah, yeah, that is, we'll complete it.

And second, on the Sukhoi 30 upgrade program, what is the likely timeline for contract signing and subsequent execution of the same? How should we think about annual revenue recognition from this program when the execution begins? And what would be the margin profile for the Sukhoi 30 upgrade revenues? Will it be closer to manufacturing margins or ROH margins?

The design program will go on up to five to six years. And so we are expecting that CCS approval, we are expecting the CCS approval current financial year. So the design probably is 5 to 6 years. Then only the upgrade program will start, production will start after 5 to 6 years. So the margin, design margin as usual it is in the range of 10 to 15 percent.

Thank you. The next question is from the line of Sumit Kishore from Axis Capital. Please go ahead.

Good afternoon. My sincere regards and best wishes to Mr. Ravi for shouldering this huge responsibility for the nation on heading HAL. My first question is, you know, the 10 to 12 percent revenue growth numerically in the second half of the year, how many LCA's? Are you sort of factoring in terms of dispatch? Because it appears to be a single digit number given the value for LCA. And when I look at the inventory plus contract effects, that's almost 490 billion rupees. So what percentage of your inventory and revenue is for the LCA program now? So maybe if you could address these two points as the first question.

As I initially explained also, since we are getting around 20 engines, we are planning to deliver around 20 LCA. I am not telling that it may happen in this quarter or next quarter or the last quarter, but this financial year we are planning to deliver this many aircraft, 20 LCA we are planning to deliver.

As regard to the...

The inventory for LCA is around 7,500 crores. You see about the unbilled revenue. Unbilled revenue is against the delivery, already happened. It's not against the inventory. Whatever we have delivered, because of the documentation and all those things, non-receptive documentation, that we could not bill it. So that is nothing to do with the LCA, I mean, non-delivery of LCA. Non-delivery of LCA, our inventory is around 8,100 crores, which includes our raw material and the WIT.

Thank you. The next question is from the line of Shuram Kapoor from Jefferies. Please go ahead.

Hi, sir. Thanks for the opportunity. I'm going to start with the bookkeeping question. If you could quantify what was your export and development orders and sales for FY26?

The export order, right now, the export order is around 400 crore. And the development order is around 3,000 crores.

Okay, got it, sir. And secondly, just want to understand, you know, on this pipeline that you mentioned of 900 billion orders over the next two years, including ROH. So if we keep ROH of, you know, about 200 billion, 20,000 crore rupees a year on the side, that leaves about 50,000 crores. You mentioned 143 ALH and 40 Donier aircraft. Could you quantify, you know, how much these programs are worth and what other programs are in the pipeline beyond these, you know, such as the UHM aircraft and, you know, any other LUH, 12 LUH limited series production that was pending? So what are the timelines and, you know, quantities and values of those?

Since these contracts are not yet 100% finalized, That's why I did not give the numbers, detailed numbers for each contract, because it takes time. But on the ballpark figure, I have just explained what are the numbers the services are expecting, and we have started discussing with them with these numbers, with the top-level cost with them. But however, it is not finalized. That's why we have not given any numbers to you.

The major contributor will be the ALH 137 program, and as usual, your ROH program will be at the same level.

Got it, sir. Thank you so much.

Thank you. The next question is from the line of Harshit from Milara Capital. Please go ahead.

Thanks for the opportunity and congrats for decent results and to CMD for having this role. Just a few questions. One is there was a news that there will be a penalty on GE for the delay in engines. So would that be from you or that would be from the Ministry of Defense? And if that is true, how do you recognize that? Any quantum that you can share?

No, these are all commercial activity as per the purchase order with GE, whatever is there. We are talking about only the penalty. There are so many terms and conditions which is available in the contract. And these terms and conditions are already available in our website also.

It's not there.

So, as per the procedure, we apply not only to GE. This is applicable for all the purchase orders we place on the vendors. Okay.

But any amount that you can suggest, sir? What could be the contract?

That's why we don't want to give any... It depends. When the delivery will happen, when the payment will be made, at that time, we'll decide. It's not the right time to tell what will be the...we cannot quantify the penalties right now. If the delivery happens, then we'll...

Okay. And, sir, lastly, just wanted to check on the AMCA program. I know you are not part of it, but is there a possibility during the production time, you know, HAL could be involved? And secondly, is there a possibility of you getting orders for a Su-57?

First, let me answer about AMCA. This we have made clear last time also because the current Tender, whatever, or the tender that is going to come is that RFI which was placed is for the D&D program only, that is to build prototypes. And they have not indicated that the same person will do production. So we are hopeful that we will participate in that. And as far as Suh 57 is concerned, it's the government's call, so we cannot comment on that right now.

Thank you. The next question is from the line of Harshit Patel from Equator Securities. Please go ahead.

Thank you very much for the opportunity, sir. My question is on the ANH. Have we completed the execution and delivery of all the legacy contracts, including the Army contract for 24 numbers? And what will be our execution schedule for the contract of this 143 ANH that you are mentioning that we will receive in next couple of years?

Oh, 25 hours. Yeah, the deliveries of ALH, we have no issues. We have delivered everything as per contract. And as far as the new one is concerned, now we have augmented the facility in the current helicopter division. And outside, private vendors also are helping us in making the structure. So we are confident that ALH, because it is our program, in the sense designed by HAL. We will be ahead of the schedule.

Just a clarification on the HTT-40 program. Wanted to check on any supply chain issues with the production, especially on the Honey Valentine's Day. Also, if you can check the execution schedule, that will be helpful. Did you mention we will start in FI-27 or FI-28 for delivery?

27. FI-27.

And how much units we are planning for FY27, and I think we should be able to complete this by FY30. Is that the right understanding?

Yeah, you are right. You are right. See, the thing is, as you said, the supply chain of Honeywell engines, it was there. A few months back, then we have the continuous review, and now it is stabilized. So the engines will start flowing from next month. And we are planning around 20 plus this year to deliver, and every year it continues. Because now we have two lines, one in Bangalore, another one is Nathik. So we should be able to ramp up faster and deliver.

Can I ask one more question, if that's okay?

Yeah, please go ahead.

What is the status of Uttam radar integration? By when we will start producing MK1A with the Uttam integrated on BAM? I believe the earlier launch was to start from the 41st unit. Is that still intact?

No, because this is controlled by DRDO. So, we are only a production agency. Once they give the production clearance, we will go to the DCPB partner who it is and we will buy. So, as of now, it is not coming in the 83 program. So, in the 97 program, we are planning to integrate this.

Thank you very much, sir, for answering my question.

Thank you.

Thank you. The next question is from the line of Chaitanya Iyer from Goldman Sachs. Please go ahead.

Hi, thank you so much for the opportunity. So I wanted to ask provisioning as a percentage of revenue was on the lower end this year. Can you please elaborate on that? And what would be the stable state guidance that we can consider for the same?

The provision is based on the happening of an event. See, last time the provision we made because one Su-30 aircraft got into an accident. So, for the replacement purpose, we made a provision of 800 crores. And that situation is not there current year. So, it's not comparable. Provision is based on any happening or not happening. So, for that reason, last year that 800 crores was there and that 800 crores is not there current year. So, there cannot be any guidance, percentage of revenue, and in provision.

And, sorry if I missed this, but could you give the exact numbers for the manufacturing, ROH, development, and exports for all four of these?

Manufacturing, see, for the current year, if you see, manufacturing is around 28 percent, and then return overall 60 percent, 62 percent, and other 10 percent.

Okay, thank you so much. Thank you.

The next question is from the line of Nilodpal Sahu from JM Financial. Please go ahead.

Good evening, sir. Thank you for the opportunity. Just wanted a clarification. Can you help quantify the manufacturing share of revenue for the 48,000 crores of this EP3 and CFO just in K1 and a half? That would be the first question. So, 48,000 crores, I assume includes some ROH component and some of the payments to ADA as well. So, can you help us understand what would be the share of purely the manufacturing part of revenue that would accrue to us?

48,000 crores. Where do you get that number, 48,000 crores? Is it the order book position you are...

Yes, the complete order is for 48,000 crores. What is the management?

This complete order is on HL. So the entire contract is with HL, and whatever supply will be made by HL, entire thing will be revenue for HL.

Thank you.

The next question is from the line of Sanjeev Zarbadeh from Antic Stock Broking. Please go ahead.

Yes, sir. Thanks for taking my question. Sir, there were predictions that in the future, the share growth of manufacturing revenue would be faster than ROH. And it could be probably, you know, impact margin going ahead. But you are guiding for 30 to 31% EBITDA margin. So how should we, how do we respond to that?

Your manufacturing, see, your repair and overall also, see, what we said, see, now, current year, if you see, your revenue growth is around 7%, and as we go, manufacturing sales will grow. Then definitely the composition what is there right now is around 28 to 30 percent to 70 percent. So it will be in the range of 50 to 50, 50-50. So there is no reduction in the repair and overall sales. Repair and overall sales will also grow. Addition of the new platforms and all those things. And the manufacturing will, as well, manufacturing sales will grow. The composition only, it will be now 30-70, it will be in the range of 50-50. And your revenue growth will also be there. So with that, we don't feel, and there will not be any stress on the... Profitability from the manufacturing contract, though revenue, I mean, the profitability on repair and overall is a little bit higher than manufacturing, but repair and overall growth will be there, as well as manufacturing, and we don't see any stress on the manufacturing sales also, in terms of profitability.

Okay, sir. Thanks.

The 30 percent will be maintained.

Okay, sir. Great. Thanks, and all the rest.

Thank you.

Thank you. The next question is from the line of Deepin Vakel from Phillip Capital. Please go ahead.

Thank you for the opportunity and congratulations on the great margin. So, first question is, I want to understand your audiobook position with respect to the project which is currently under execution. Like, what is the pending audiobook for engines and ALH helicopters? So, can you help us with the amount breakup for the book currently under execution?

Currently, as you see, LTA is one of them, and we have C30, 12-230 we are doing, AL31FP engine we are doing, Dornier 228, ALH against 16-21, ALH we are doing, LCH as usual, for this year, we are doing. HDD40 and RD30. These are the major platform which is already going on, which I told in my opening statement that around 284,000 crore order is there.

Thank you. The next question is from the line of Amit Anwani from PL Capital. Please go ahead.

Thank you. I'm audible.

Yeah, please go ahead.

Yeah. So my question again on LCA. So you did highlight that I think there is a final leg of iteration and probably six by September we can deliver. So, I think so far in April, May, we may not have received the engine. So, what is the understanding now? Are we still targeting to get at least two engines per month from probably next month till March?

No, no, Mr. Amit, again, thanks for your question. June, we are expecting one engine now. Then, afterwards, it is going to August. From August, they have committed two, and then by end of this year, around 15 to 20 years, because 15 is telling, yes, I will give, but the balanced one, he may get more, which is still not committing. So, that's why I told 20 years, he will deliver this year.

So, at least 15 additional, and that will be largely starting from August to March.

August, yeah, correct, exactly.

So, then deliveries will slip to next financial year. Is it correct? So, how much time it takes for engine to be received after you start delivering, and till the final delivery happens to the IAF? So, how much time it is going to take?

Around 30 to 45 days.

30 to 45 days. Understood. Sir, what is the core reason that last financial year also, I think you guys received a commitment of at least two engines per month, but nothing of that sort materialized. So is it the issue at the G end in terms of supplies or so what is the core issue that so much of variability is happening in terms of delivery from G despite now things have been okay versus This with the COVID time. So what is the core issue at there at?

Yeah, see, supply chain issue is global. It has not spared anybody, even the big players like GE or Honeywell, everybody, everybody are impacted with the supply chain. And they also have gone through that cycle. There were some casting issues, what they had, because we, as I explained earlier, we went to the Tire 2, Tire 3 suppliers also, to understand the real issue. And they had real supply chain issues. So, it is again, supply chain, as I told, that disruption is hit GE also. Now they have found alternate for that, so that's why he is committing the numbers what I explained to them.

I'm the truth, sir. So finally, you mentioned about the ongoing projects. Just wanted to understand in terms of numbers, how much, for example, the engines RD and LFP, how much numbers you're targeting for deliveries across different platforms that would help?

Our target is around 30 to 35 engines per annum, L31FP, and at 33, only 15 engines are left, and those 15 will be delivered in the current financial year, 2016-2017.

Right, so what's the target for HTTALH?

ALH Army, the 10 numbers are left out, and then we are going to deliver those 10, and... One on five, and one on six is eight.

These are all on track, and we'll be able to...

And LCA, you said probably we are targeting 15 to 20 deliveries this financial year. That's right?

Yeah, you're right.

Understood, sir. Thank you so much, sir, and all the best. Thank you.

Thank you. The next question is from the line of Shreya Garawal from Asian Market Securities. Please go ahead.

Hi, this is Mayur Milak. So, first thing, you've added about 9,000-odd crore into your inventory this year, and you said bulk of that is the LCA inventory that you've carried. So, this is all the bodies that you had made, the airframes and the engines received, all of that is sitting in inventory, is it?

Yes, yes. That is the W.I.P. what we have built up. We don't have only, see, you are only talking about LCA. Many programs are going on. And the inventory, see, repair, if you see, out of 30,000 crore, 33,000 crore, 20,000 crore is towards repair and overhaul and supply of spare. And so we built up inventory for repair and overhaul also, spare supply. Then we have 233 kits, L31FP engines, R33 engines, then LCH to some extent, ALH. So this inventory is for all those platforms, STD-40. LCH is a part of it, and as I said, out of 30,000 LCHs, it's around 8,000.

So the second thing, we've had capacities of 24 LCAs, and assuming that these deliveries begin as and when in this fiscal, will it be fair to assume that we should start having a better operating efficiency and some recovery in margins because of that as well, since most of that facility would be lying idle as of now?

Why they are not idle? Because, you see, production is happening. We have three lines now, two in Bangalore and one in Nasi. Not a single production line is idle because we are continuously building the structures, equipping them. Everything is being done. It's not that these facilities are idle. That is why we were able to do what we showed at the March 10, 21, 22, structures ready. Those structures are fully built and engine ground run completed. Means all the systems are working fine. So there is nothing called idle capacity as of now. And we have 97 order also coming. All these facilities will be 100% utilized throughout the year.

Okay. And, sir, just since you've been mentioning it time and again that there is an ongoing process of, you know, the checking and the facilities on the LCA, and approvals are expected once we complete most of these parameters. Now, just trying to understand, let's say, as and when the first round of deliveries happen. Will that mean that all other dedicated numbers will have the same software or there will still be upgrades coming in on the pending volume that needs to be delivered to the armed forces?

No, because once the certification happens, all aircrafts will be with the same software. Minor modifications will be there. That's always continuous. Improvements will be there. But that will not be like a huge jump. The minor updates will be that because once they fly, few improvements will be required. So then we will take it. And most of the running tickets will run in the office.

Okay, and so that is why you were saying that once those deliveries happen, we should expect better returns on the spare part use and the ROH income. So will all of those changes be part of the service income?

The LCA will not be, because these deliveries are happening now, these ROHs will come after some time.

See, already 38 LCAs we have delivered from earlier contracts. Those things will come now. See, and then this ALH continuously we are supplying 20-25 every year. So those things will come. So there will be addition in the quantity, the paranormal quantity. And these LCS, what, will be delivering, right, the current finance year, maybe, like, three years, two to three years after that, this will come forward. Our cycle will start.

Okay. Okay. Sure. That will be all. Thank you so much.

Thank you. The next question is from the line of Sagar Dhawan from E-Balue Quest. Please go ahead.

Thank you for the opportunity. Sir, I just wanted to understand on the ROH side, typically in the LCA, like you said, you believe at 38. In the 100 rupees of the value of the equipment, what is the relative ROH portion in that? I mean, if 100 rupees is the equipment, then enter a thumb rule that this would be the ROH component in terms of value.

No, no, RHS, you see, repair and overall has nothing to do with the sale of the equipment. See, after that, it depends on the... What type of repair, whether it is a repair or it is a full overhaul. If it is a full overhaul, we have a separate kind of mechanism, pricing mechanism. 10 to 15 will be on cost plus basis. So it will come for the overhauling and whatever will be the cost, actual cost in terms of component, material, labor. So, the selling price will be decided on that basis. And based on the sample, then the overwhelming cost will be fixed. Well, it's a procedure, repair and move procedure. We call it PPRC pricing policy review mechanism. So, it is done in that way. So, there is no fixed percentage that ROH will be a fixed percentage of the equipment cost.

Got it. Sir, one more clarification. When you receive an order for a new aircraft, let's say Pages LCA order you have received a couple of years back, you know, in 1997 plus 1983, did that order flow include the ROH portion in that or that order is only for the equipment?

It's only for production. It's only for the delivery of the quantity along with the spares. That will be a separate order later.

Thank you. The next question is from the line of Shubham Daliya from Nirmalbang Institutional Equities. Please go ahead.

Hi, thank you for the opportunity and congratulations on the great set of numbers. Sir, my question is on the number of deliverables that we are expecting and the guidance that is there. Because we are expecting around 20 plus SKT 40, then we are also expecting LCS to go. Then the guidance is 10 to 12 percent. So are we seeing some risks in any of these programs? That's my first question.

The risk, when we tell, 10 to 15, 10 to... 12% then hopefully we have taken all these things into factor while we compute our... Even your target for the current financial year. So hopefully we expect that whatever we are told right now, we will be delivering. And we have our own ways and means to see that if something goes wrong. And we will always have our plan B in the year. That we cannot tell you right now. So, but... We are confident that LCA and STT-40 will be delivered, and whatever guidance we are giving, 10-12% will be able to maintain it.

Thank you very much. Ladies and gentlemen, that was the last question for today. I now hand the conference over to management for closing comments.

This is Ravi here, CMD again. I just want to thank each one of you for taking your time and asking us questions regarding all the questions. And we at HHL are continuously working towards meeting the targets, what we set. And I, again, once again, thank each one of you for participating in this call. Thank you very much.

Thank you. On behalf of Ambit Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

Thank you.